Implementation of Green Logistics, Research Paper Example

Introduction

Many researchers and business experts look at green logistics as a solution to reduce the environmental impact of transportation and storage. However, without implementing green logistics into supply chain management and embracing sustainability as an organizational culture, all efforts will be creating environmental paradoxes, according to Rodrigue et al. (2001). It is indeed hard to implement changes and make them serve the organization’s main operations management goals: reducing costs, increasing time-efficiency and implementing e-commerce when possible. The below research paper is focusing on the implementation processes and results of green logistics: trying to find an answer to the question: what is the impact of implementing green initiatives in logistics on the organization as a whole.

According to McKinnon, (2012, p. 4.) environmental sustainability should be the new main priority for managers working in logistics. It does not only maximize profitability, but also reduces the environmental impact of transportation, which, at the moment, accounts for a total of eight percent of the world’s CO2 emissions.

Objectives

During the research and literature review, the authors would like to examine the impact of green logistics on social, economical and environmental objectives, as well as supply chain effectiveness and management within the organization. (McKinnon, 2012, p. 5.)

Thesis Statement: The increase of green logistics has a positive impact on operation costs, reputation and effectiveness of the organization, while it helps them reduce the environmental impact of transportation.

Literature Review

McKinnon (2012, p. 6.) confirms that green logistics research has gone through a lot of change in the past few decades. First of all: initiatives of green logistics research started in the public sector and soon got embraced by private organizations. Further, organizations started to embrace sustainability on a strategic level instead of adapting minor operational management changes. (McKinnon, 2012, p. 7.) Finally, the idea spread globally and was implemented by international companies.

Rodrigue et al. (2001) states that the importance of “greenness” strengthened in the corporate world in the 1990-s when the environmental impact of transportation and CO2 emission became publicly known. The authors also state that while becoming “green” can be implemented in the corporate social responsibility statement of the organization, at the same time it can also open up new opportunities for waste management, recycling, generating clear energy and saving costs. (p. 2.) The article detailing the paradoxes of green logistics names a few important business areas where inconsistency with environmental compatibility can be found. These are: cost management, speed of service, reliability, warehousing and e-commerce’s impact on the environment. The organization’s strategies for managing costs, efficiency, warehousing and cost of e-commerce deliveries need to be matched with the green logistics initiatives.

One of the focal points of research is reverse logistics today. McKinnon (2012) and Wright et al. (2011) as recyclables’ transportation accounts for a great percentage of transportation cost today, as sustainability policies are becoming more persistent in large companies. The cost of refurbishing, recycling and returns needs to be reduced, while the CO2 emissions related to these activities minimized. (Wright et al. 2011, p. 10.)

With regards to the impact on the organization’s market share, profitability and reputation, quoting a research survey among large distribution companies (Rao and Holt, 2005, p. 912.) states that companies not only achieved cost savings, but managed to increase sales, market share, take advantage of new opportunities in the market and gain more profits as a result of implementing green logistics into their strategies. (McKinnon, 2012, p. 14.) The main drivers of creating green supply chains and implementing them into logistics policies are detailed in Table 1.2 by McKinnon. (2012, p. 17.) Comparing three different studies, the main drivers determined are:

a, Improving customer relations

b, Becoming a leader in the industry regarding sustainability

c, Reducing costs of logistics

d, Compliance

e, Optimizing logistics flow

Discussion

There are different approaches organizations can use for implementing green logistics into their supply chain management. Rodrigue et al. (2011) talk about the importance of a healthy environment. In the terms of the research paper, sustainability equals to an organization to “promote economic growth is essential for effective and lasting environmental management”. (p. 9.) The authors also confirm that the implementation should be carried out on a local and global scale at the same time. The main objective of green logistics implementation should be to “minimize movements through land use policies that reduces the level and geographical separation of industrial activities”. (p. 10.)

Government intervention is also promoted by Rodrigue et al. (2011) and McKinnon (2012) and Wright et al. (2011). McKinnon and Edwards (2012) talks about the improvement of vehicle utilization in both transportation of goods and reverse logistics. The best model to measure the utilization level of vehicles is to review the tonne-kilometers per annum per vehicle. (p. 206.) There are various aspects to be taken into consideration when setting utilization levels. The external and internal factors determined by the research are: market-related, regulatory, inter-functional and equipment related. The main focus should be on the effective collaboration of departments and units within the supply chain. (p. 213.) Reviewing the influence of governmental regulation within recycling and supply chain management, Wright et al. (2011) conclude that while initiatives are provided to promote recycling and incentives are offered for companies, some for profit collectors also act as drivers towards green logistics and reverse logistics. Still, the authors state that there is a need for further governmental intervention in order to reduce the overall environmental costs of industries and transportation of goods. Still, not much focus is put upon creating goods that are easier to recycle and are reusable. (p. 13.) Rodrigue et al. (2001, p. 10.) still predict that logistics companies which are able to match their profitability goals with green initiatives are building their future success. Indeed, the researchers state that “environmental management systems, such as ISO 14000, may offer opportunities to green the logistics industry.”. (p. 10.)

The implementation methods are only outlined by the above reviewed authors, however, Sanchez-Rodrigues (2006) provides clear blueprints for implementation into Lean and Just In Time (JIT) supply chain management methods. The author confirms that the adaptation of Lean supply chain management as a standalone method already reduces waste and is therefore greener than traditional approaches. Still, it is important to look at the product’s life cycle and design effective, green reverse logistics systems. (p. 19.) Implementing JIT delivery into the system would increase customer satisfaction, reduce time taken and potentially environmental impacts as well. However, both methods can have initially contradicting objectives to green policies. As JIT might result in more and smaller deliveries, it is essential to adjust the traditional Just In Time method to meet green logistics goals at the same time. The solution, according to the conclusion of the paper should lie in “transport and supply chain perspective, sourcing and location of suppliers are critical factors to achieve an effective JIT system, since optimisation of transport flows can be achieved in conjunction with minimisation of inventory”. (p. 22.) This statement is also confirmed by Walton et al. (2006), who state that both lower costs and higher customer satisfaction can be obtained through “greening” the supply chain. Further, there is a need for improving performance through sharing information with suppliers, customers and partners. Likewise, Agile supply chain management can have a positive or negative impact on the performance of green logistics performance, just like postponement. (p. 29.)

Findings

The above review of research has proved that traditional supply chain management systems need to be adjusted in order to:

a. remain compliant with environmental initiatives

b. reduce costs

c. maintain customer relationships

d. support reverse logistics designs

e. increase effectiveness of the supply chain.

The integration of green logistics into any existing traditional supply chain management system is challenging, as confirmed by Rodrigue et al. (2001) and not free from paradoxes. However, redesigning existing supply chains in order to reduce both costs, lead times and environmental impact can be completed by measuring the impact based on vehicle utilization statistics.

Conclusion

While investment required for redesigning supply chains to comply with green logistics environment seems excessive, it is not without its long-term benefits. As the above research has proven, customer relationships, cost-effectiveness and firm reputation can be improved through the introduction of green policies, Further, risks of legal or regulatory non-compliance can be reduced and the organization can become a leader within the industry in green development. While the government supports initiatives related to green logistics, there are new markets opening up for firms that focus on integrating green policies on a system level into supply chain management.

References

McKinnon, A. (2012) Environmental sustainability. A new priority for logistics managers. In: Green logistics: Improving the environmental sustainability of logistics. McKinnon, A., Browne, M., Whiteing, A. (eds.) 3-22. Kogan Page Publishers.

McKinnon, A., Edwards, J. (2012) Opportunities for improving vehicle utilization. In: Green logistics: Improving the environmental sustainability of logistics. McKinnon, A., Browne, M., Whiteing, A. (eds.) 205- 280 Kogan Page Publishers.

Rao, P., Holt, D. (2005) Do green supply chains lead to competitiveness and economic performance? International Journal of Operations & Production Management. 25 (9) 898-916.

Rodrigue, P., Slack, B., Comtois, C. (2001) Green logistics (The Paradoxes of). In: The handbook of logistics and supply-chain management. Handbooks in Transport. Brewer, A., Button, K., Hensher, D. (eds.) London: Pergamon/Elsevier.

Sanchez-Rodrigues, V. (2006) Supply chain management, transport and the environment- a review. Green Logistics Consortium Working Paper. Retrieved from http://www.greenlogistics.org/SiteResources/7a76ee40-f62d-4efe-9d4e- 47ac2a2a9211_WM1%20-%20Cardiff%20-%20Supply%20Chain%20Management.pdf

Walton, S., Handfield, R., Melnyk, S. (2006) The green supply chain: integrating suppliers into environmental management processes. International Journal of Purchasing and Materials Management. Vol. 34. (1) 2-11

Wright, R., Richey, G., Tokman, M., Palmer, J. (2011) Recycling and reverse logistics. Journal of Applied Business and Economics. Vol. 12(5) 2011. p. 9-19.